Civil Society Statement on Brazilian Compulsory Licensing Dispute

We, the undersigned Brazilian and international Civil Society Organizations and Networks, urge the Brazilian government immediately to authorize a compulsory license on lopinavir/ritonavir and begin local generic production of this important AIDS medicine without delay. This step would be historic, not only for Brazil but for the entire developing world.
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We, the undersigned Brazilian and international Civil Society Organizations and Networks, urge the Brazilian government immediately to authorize a compulsory license on lopinavir/ritonavir and begin local generic production of this important AIDS medicine without delay. This step would be historic, not only for Brazil but for the entire developing world.

Brazil has for years contemplated issuing compulsory licenses on various antiretrovirals (ARVs), and most recently, in March 2005, announced a three-week deadline for negotiating a voluntary license for three ARVs that together consume more than 70 % of the AIDS drug budget of the Brazilian National AIDS Program – lopinavir/ritonavir (marketed by Abbott Laboratories as Kaletra®), efavirenz (marketed in the developing world by Merck & Co., Inc. as Stocrin®), and tenofovir disoproxil fumarate (marketed by Gilead Sciences, Inc. as Viread®).

Nearly three months after the end of the deadline, President Luiz Inácio (Lula) da Silva and Minister of Health Humberto Costa, announced a public interest declaration (Act No. 985) as a precursor to the issuance of a compulsory license. The declaration includes a 10-day deadline for Abbott to lower the price of Kaletra® and match Farmanguinhos’ price before the government authorizes a compulsory license. If Abbott responds to this final ultimatum by 6th of July, there will be no compulsory license and the government will have short-term benefits – the price of Kaletra® could drop from 2,628 US$ per patient per year to 1,056 US$ per patient per year.

However, this will not provide a long-term, sustainable solution for Brazil. Rather than being satisfied with short-term compromises, the Brazilian government must follow through on its long-standing commitment to overcome patent barriers to access to ARVs and other essential medicines through compulsory licensing. Compulsory licensing is a measure that is fully compliant with the World Trade Organization (WTO) Agreement on Trade-related Aspects of Intellectual Property Rights (TRIPS) and permitted under Brazilian law.

Only with generic competition will the price of lopinavir/ritonavir and other important antiretrovirals continue to decrease in the future, because of economies of scale. After the full implementation of the TRIPS agreement in all developing countries with drug manufacturing capacities, only compulsory licensing will allow for generic competition.

A compulsory license on lopinavir/ritonavir in Brazil will progressively decrease worldwide prices of the active pharmaceutical ingredients (APIs), which can constitute 60-80% of the cost of a drug. This will allow not only Farmanguinhos to eventually achieve prices below those offered by Abbott, but will also enable other manufacturers outside of Brazil to produce this urgently-needed medicine more affordably. This phenomenon will not take place if the Brazilian government reaches a mere price agreement which is a palliative solution that is not sustainable.

The prices of first-generation ARVs have fallen dramatically – by more than 98% – due to international generic competition. While companies in India are the largest suppliers of generic ARVs worldwide, the single most important factor in reducing the price of first-generation ARVs globally was the fact that they were also produced in Brazil. The economies of scale that followed from Brazil’s large-scale purchases of APIs made the remarkable worldwide generic price reductions possible.

Moreover, while there may be restrictions on exporting under a license for government use, it is nevertheless important to note that Brazil can, according to the TRIPS Agreement, export under certain conditions and it should explore all options to enable other countries to benefit from the generic competition and price reductions that will be achieved in Brazil.

It has been nearly four years since all WTO members unanimously adopted the Doha Declaration on TRIPS and Public Health, and yet very few countries have been able or willing to actually implement its provisions. Brazil’s action could reinforce the importance of these legal public health safeguards as vital tools in the fight for access to essential medicines throughout the developing world.

Finally, a compulsory license in Brazil will send a powerful message to the rest of the world that public health can and must be prioritized over commercial interests.